“Fourth-quarter results reflect our efforts to right size and focus our
business to take advantage of the emerging value hearing health
opportunity while maximizing our core medical business”

Highlights:

Sales to IntriCon’s largest medical customer increased $1.0 million
sequentially from the third quarter—sales to this customer in the 2017
first quarter are expected to be at record levels and continue to
increase throughout the year;

IntriCon sharpened its focus on the emerging value hearing health
opportunity, exercising its option to acquire 100 percent of Hearing
Help Express (HHE). Beginning in the quarter, HHE financial results
have been consolidated into IntriCon’s financial statements; and;

The company found a buyer for its non-core cardiac diagnostic
monitoring (CDM) business, which is now held for sale and classified
as discontinued operations.

Financial ResultsFor the 2016 fourth quarter, the company
reported net sales of $17.7 million, compared to $18.4 million in the
prior-year period. The decline was primarily due to year-over-year
revenue shifts from IntriCon’s largest customer. Net sales rose 14
percent sequentially from the 2016 third quarter and included a $1.0
million contribution from HHE. IntriCon posted a net loss attributable
to shareholders of ($1,809,000), or ($0.27) per share, versus net income
attributable to shareholders of $810,000, or $0.13 per diluted share,
for the 2015 fourth quarter. The 2016 fourth-quarter loss included a
loss from discontinued operations of ($1,014,000), or ($0.15) per share,
of which $796,000, resulted from a non-cash, write down of assets
related to the pending divestiture of the company’s CDM business.

“Fourth-quarter results reflect our efforts to right size and focus our
business to take advantage of the emerging value hearing health
opportunity while maximizing our core medical business,” said Mark S.
Gorder, president and chief executive officer of IntriCon. “We made
meaningful progress establishing a new direct-to-consumer distribution
channel during the quarter and look forward to a strong first quarter
and 2017 in both hearing health and medical.”

Gross profit margins were 25.9 percent compared to 29.3 percent in the
prior-year fourth quarter. The decrease was primarily due to lower
revenue.

Operating expenses for the fourth quarter were $5.0 million, compared to
$4.2 million in the prior-year fourth quarter. The increase was largely
due to the consolidation of HHE during the quarter.

Business UpdateSales in IntriCon’s medical business
decreased 8 percent in the 2016 fourth quarter, primarily driven by
timing shifts with IntriCon’s largest customer, Medtronic. The lower
sales to Medtronic were expected as they manage the transition of their
recently FDA-approved MiniMed 630G system. IntriCon began ramping up
MiniMed 630G production in the fourth quarter which resulted in a $1.0
million sequential increase in Medtronic revenue from the 2016 third
quarter.

The company believes it’s well-positioned with Medtronic, with 2017
first-quarter sales expected to be at record levels, and growth to
continue throughout the year. In addition to the MiniMed 630G system,
IntriCon is also designed into the MiniMed 670G system which was
recently approved by the FDA, and is scheduled to be launched in the
spring of 2017. The company is working on other revenue opportunities
with Medtronic that could result in notable revenue gains in the second
half of 2017.

Hearing health sales increased 4 percent from the prior-year fourth
quarter, primarily stemming from a $1.0 million contribution from HHE.
As previously announced, IntriCon acquired a 20 percent stake in DeKalb,
Ill.-based HHE, a direct-to-consumer mail order hearing aid provider, in
the fourth quarter of 2016. In January 2017, the company announced that
it exercised its option to acquire the remaining 80 percent stake in
HHE—the deal is expected to close in mid-2017.

Said Gorder, “Acquiring HHE gives IntriCon direct access to consumers
and the emerging value-based hearing health care market. HHE offers a
lower-priced alternative for consumers to purchase devices
directly—circumventing layers of costs associated with the conventional
hearing aid channel. We look forward to building on the HHE platform by
leveraging our own technically advanced devices and making targeted
investments in management, marketing and advertising—and ultimately
incorporating an online component.”

Since taking its initial stake, IntriCon has made meaningful progress
integrating and optimizing HHE. To date IntriCon has:

Leased a new HHE facility which is expected to drive operating
efficiencies and better work management by merging two locations into
one.

Continued Gorder, “Untreated hearing loss in the United States is a
substantial problem, and high device costs have created significant
barriers to access for most Americans. HHE offers a lower-priced
alternative for consumers to purchase devices directly.”

The fourth-quarter hearing health gain also contained contributions by
PC Werth, acquired by IntriCon UK to build a hearing health platform in
England. In January 2017, IntriCon took steps to reduce PC Werth’s cost
structure by $200,000 and refocus sales efforts into the National Health
Service (NHS) clinics. IntriCon is currently working with the NHS for
approval of a third device, the K940D, which will enhance IntriCon sales
capabilities. The K940D, which is a traditional behind-the-ear device,
is very appealing to the NHS because of its broad-fitting range and
advanced features. Approval of the K940D is anticipated by the end of
April.

In addition to HHE and PC Werth, IntriCon is focused on driving growth
and creating efficiencies in its current value-based hearing healthcare
initiatives. Domestically, IntriCon continues its work with earVenture,
a joint venture with the Academy of Doctors of Audiology (ADA). Over 650
ADA members have registered to join the earVenture program. According to
Gorder, audiologists have shown great interest in earVenture, but have
been slow to adopt the new model.

IntriCon has taken steps to right-size earVenture, without compromising
the ability to promote the business model. While the company does not
view earVenture, near term, as a meaningful contributor to sales, it
continues to provide valuable industry insights and has the potential
for future value by connecting it to IntriCon’s emerging DTC channel.

Said Gorder, “Acknowledging the significant opportunity we have with HHE
has prompted us to focus our efforts with the ADA and NHS. Over the last
decade, we have invested in technology and low-cost manufacturing to
design and build superior devices and fitting solutions to address the
estimated $1 billion annual value hearing health market.”

In order to focus financial and operational resources on value hearing
health and the growing DTC opportunity, IntriCon has made the strategic
decision to divest its non-core CDM business. The company has found a
buyer for the business, and the sale is expected to close in the first
quarter of 2017.

Looking AheadConcluded Gorder, “2016 was transitional year
for IntriCon as we made changes and investments to focus our business.
We enter 2017 with the infrastructure in place to drive long-term
growth, and we remain confident in the prospects of our medical business
and look forward to the expected 2017 ramp up of Medtronic’s sales.
Equally important, we’re excited about the opportunity that we created
through thoughtful hard work and planning: a chance to deliver superior
outcomes-based affordable hearing healthcare. We expect that
capitalizing on this opportunity will lead to both a very bright future
for IntriCon and to long-term growth in shareholder value. Based on
information currently available, we anticipate 2017 first-quarter net
sales to be $18.6 to $18.8 million and positive EPS from continuing
operations. For the year, we anticipate revenue to range between $78
million and $80 million.”

Conference Call TodayAs previously announced, the company
will hold an investment community conference call today, Thursday,
February 16, 2017, beginning at 4 p.m. CT. Mark Gorder, president and
chief executive officer, and Scott Longval, chief financial officer,
will review fourth-quarter performance and discuss the company’s
strategies. To join the conference call, dial: 1-888-263-2744 and
provide the conference ID number 9031214 to the operator. To access the
replay, dial 1-888-203-1112 and enter passcode 9031214.

About IntriCon CorporationHeadquartered in Arden Hills,
Minn., IntriCon Corporation designs, develops and manufactures miniature
and micro-miniature body-worn devices. These advanced products help
medical, healthcare and professional communications companies meet the
rising demand for smaller, more intelligent and better connected
devices. IntriCon has facilities in the United States, Asia, the United
Kingdom and Europe. The company’s common stock trades under the symbol
“IIN” on the NASDAQ Global Market. For more information about IntriCon,
visit www.intricon.com.

Forward-Looking StatementsStatements made in this release
and in IntriCon’s other public filings and releases that are not
historical facts or that include forward-looking terminology are
“forward-looking statements” within the meaning of the Securities
Exchange Act of 1934, as amended. These forward-looking statements may
be affected by known and unknown risks, uncertainties and other factors
that are beyond IntriCon’s control, and may cause IntriCon’s actual
results, performance or achievements to differ materially from the
results, performance and achievements expressed or implied in the
forward-looking statements. These risks, uncertainties and other factors
are detailed from time to time in the company’s filings with the
Securities and Exchange Commission, including the Annual Report on Form
10-K for the year ended December 31, 2015. The company disclaims any
intent or obligation to publicly update or revise any forward-looking
statements, regardless of whether new information becomes available,
future developments occur or otherwise.

INTRICON CORPORATION

Consolidated Condensed Statement of Operations

(In Thousands, Except Per Share Amounts)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2016

2015

2016

2015

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Sales, net

$

17,747

$

18,435

$

68,009

$

68,527

Cost of sales

13,148

13,027

50,937

49,771

Gross profit

4,599

5,408

17,072

18,756

Operating expenses:

Sales and marketing

1,343

1,134

4,700

3,733

General and administrative

2,583

1,931

9,154

7,013

Research and development

1,126

1,116

4,688

4,279

Restructuring charges

-

-

132

-

Total operating expenses

5,052

4,181

18,674

15,025

Operating income (loss)

(453

)

1,227

(1,602

)

3,731

Interest expense

(167

)

(82

)

(553

)

(369

)

Other income (expense)

(129

)

(278

)

(602

)

(261

)

Income (loss) from continuing operations before income taxes and
discontinued operations

(749

)

867

(2,757

)

3,101

Income tax (benefit) expense

97

(88

)

217

19

Income (loss) before discontinued operations

(846

)

955

(2,974

)

3,082

Loss from discontinued operations, net of income taxes

(1,014

)

(256

)

(1,770

)

(965

)

Gain on sale of discontinued operations, net of income taxes

-

-

-

-

Net Income (loss)

(1,860

)

699

(4,744

)

2,117

Less: Loss allocated to non-controlling interest

(51

)

(111

)

(157

)

(111

)

Net Income (loss) attributable to shareholders

$

(1,809

)

$

810

$

(4,587

)

$

2,228

Basic income (loss) per share attributable to shareholders:

Continuing operations

$

(0.12

)

$

0.18

$

(0.43

)

$

0.54

Discontinued operations

(0.15

)

(0.04

)

(0.27

)

(0.16

)

Net income (loss) per share:

$

(0.27

)

$

0.14

$

(0.71

)

$

0.38

Diluted income (loss) per share attributable to shareholders:

Continuing operations

$

(0.12

)

$

0.17

$

(0.43

)

$

0.51

Discontinued operations

(0.15

)

(0.04

)

(0.27

)

(0.15

)

Net income (loss) per share:

$

(0.27

)

$

0.13

$

(0.71

)

$

0.36

Average shares outstanding:

Basic

6,805

5,977

6,497

5,907

Diluted

6,805

6,291

6,497

6,241

INTRICON CORPORATION

Consolidated Condensed Balance Sheets

(in thousands, except per share data)

December 31,

December 31,

2016

2015

(unaudited)

Current assets:

Cash

$

667

$

367

Restricted cash

595

610

Accounts receivable, less allowance for doubtful accounts of $170 at
December 31, 2016 and $135 at December 31, 2015

7,289

8,335

Inventories

12,343

13,635

Other current assets

957

856

Current assets of discontinued operations

123

1,086

Total current assets

21,974

24,889

Machinery and equipment

40,152

38,426

Less: Accumulated depreciation

33,546

31,717

Net machinery and equipment

6,606

6,709

Goodwill

10,555

9,551

Intangible Assets

2,920

-

Investment in partnerships

146

224

Other assets, net

1,557

480

Other assets of discontinued operations

-

33

Total assets (a)

$

43,758

$

41,886

Current liabilities:

Current maturities of long-term debt

$

2,346

$

1,908

Accounts payable

6,722

7,763

Accrued salaries, wages and commissions

2,413

2,466

Deferred gain

-

55

Other accrued liabilities

1,914

1,279

Liabilities of discontinued operations

123

116

Total current liabilities

13,518

13,587

Long-term debt, less current maturities

9,284

7,929

Other postretirement benefit obligations

501

542

Accrued pension liabilities

737

812

Other long-term liabilities

707

119

Total liabilities (a)

24,747

22,989

Commitments and contingencies

Shareholders’ equity:

Common stock, $1.00 par value per share; 20,000 shares authorized;
6,820 and 5,981 shares issued and outstanding at December 31, 2016
and December 31, 2015, respectively

6,820

5,981

Additional paid-in capital

21,383

17,721

Accumulated deficit

(8,633

)

(4,046

)

Accumulated other comprehensive loss

(1,014

)

(721

)

Total shareholders' equity

18,556

18,935

Non-controlling interest

455

(38

)

Total equity

19,011

18,897

Total liabilities and equity

$

43,758

$

41,886

(a) Assets of HHE, the consolidated variable interest entity, that
can only be used to settle obligations of HHE were $5,159 at
December 31, 2016. Liabilities of HHE, for which creditors do not
have recourse to the general credit of IntriCon were $3,833 at
December 31, 2016.